USDA sends REAP streamlining rule to White House for review

USDA on June 15 sent a final rule on the Rural Energy for America Program to the White House Office of Management and Budget, a move aimed at simplifying and streamlining REAP requirements and processes. The filing lands as rural developers, farmers and small businesses are still navigating a stop-start application calendar for one of the key federal finance tools tied to on-site renewable energy and efficiency upgrades.

REAP gives guaranteed loan financing and grant funding to agricultural producers and rural small businesses for renewable energy systems or energy-efficiency improvements. USDA’s program materials say eligible technologies include renewable biomass, anaerobic digesters, biogas, wind, solar, small hydro-electric, ocean, geothermal and hydrogen derived from those sources. USDA guidance also says biomass can include biodiesel and ethanol, which keeps the program relevant to parts of the biofuels supply chain even when it is not funding a fuel plant directly.

The program’s current status shows why the rule matters for project finance, not just paperwork. USDA’s March 31, 2026 REAP FAQ said guaranteed loan applications for fiscal 2026 were being accepted under the OneRD guarantee regulation, but grant windows were not open and the Energy Audit and Renewable Energy Development Assistance program would not be funded in 2026. USDA had already delayed opening the first fiscal 2026 grant window on June 30, 2025, then said it would start taking applications on October 1, 2025. The agency also paused Inflation Reduction Act REAP applications in December 2024 before later saying it expected to accept both REAP IRA and Farm Bill applications again starting October 1, 2025.

USDA’s regulatory reset has been broader than REAP alone. The agency issued a notice of funding opportunity for fiscal 2025, 2026 and 2027 on October 16, 2024, then rescinded that notice in an April 15, 2026 Federal Register notice while it worked on new regulatory changes. USDA said applicants who had already filed under the rescinded notice would have to submit new applications unless they already had a fully executed Financial Assistance Agreement. USDA also imposed a 90-day administrative pause on biodigester and controlled environment agriculture projects across Rural Business-Cooperative Service programs, later extending it in April 2026 while it reviewed historical losses and poor-performing loans in those categories.

The scale of the money at stake is not small. The Government Accountability Office said USDA’s 2023 REAP funding notice made $1.055 billion in Inflation Reduction Act funds available across six quarterly cycles, with some projects eligible for grants covering up to 50 percent of project cost. If OMB clears the new rule, the test for USDA will be whether the rewrite shortens review timelines and reduces friction for smaller rural energy projects that depend on REAP to close financing.